“Fiscal Illusion Causes Fiscal Delusion – Please Be Careful!”

Abstract

Although fiscal illusion was first articulated by Puviani (1903), it is a current issue, and its consequences are rather serious, as shown in this paper. Fiscal illusion enlarges the public sector but it can, by itself, be a considerable threat to the trust between the State and its citizens, ultimately promoting serious instability in economic cycles and in democratic institutions.